Archive - Feb 2, 2010 - Story

The latest out of the Richmond Fed is a joke of a paper that while analyzing the possibility that the entire stock market and dollar carry trade is one zero cost of capital-funded bubble, skips over this possibility and instead goes on to analyze the "factors that could contribute to a fundamentals-based explanation for the recent rally in certain risky asset markets." Spoiler alert: No bubble - it's all based in sound reality.

Now that every trigger happy, red-bull OD'ing HiFTer is keenly following every lockbox in possession of Greek bureaucrats to see how many billions more in debt will "suddenly" appear out of thin air, many have forgotten about that "other" sovereign bailout - Dubai. The reason: Dubai World, which was supposed to present a restructuring offer for $22 billion in debt in a meeting with lenders in December, never did. January wasn't any different. February, by the early looks of it, will also be a dud. So as the world grinds along and creditors have no clue what the hell is going on in Dubai, and increasingly so in Greece, everyone has their fingers crossed that not only will there be no default anywhere, but that anyone who dares to mention just what a great big castle in the air the entire sovereign debt arena has become, funded by overt and covert cash transfers by the Federal Reserve, will be (in)voluntarily swept under the rug.

It is no secret that SocGen's Dylan Grice has not been a big fan of the Japanese economy, or stock market for that matter. We have highlighted his perspectives on the island nation in the past, and his concerns about a likely demographic-induced funding crunch have been picked up by the likes of Hayman Capital's Kyle Bass. So when Grice comes out with constructive suggestions on how to play Japanese relative value, especially if it is based on liquidation value considerations, one would do well to listen.

It appears not even one day can pass without some new and improved indication of Greece's economic collapse. The latest comes from website Kathimerini.gr which discloses that the recently appointed "Committee on the Reliability Of Statistics" has uncovered $40 billion of previously hidden debt (one wonders when America will get a comparable commission: no question we are in dire need of one).

Watch Tim Geithner's testimony before the Senate Finance Committee on the President's amusing 2011 budget live and commercial free, here. It is time someone asks why the GSEs continue getting the Federal Budget exemption.

We hope, although it is very unlikely, Senator Bunning somehow makes a guest appearance with some very directed questions.

The January data for the Johnson Redbook retail index is out, missing the MNI consensus for both YoY change, which was at 1.0%, compared to a 1.2% consensus, while month over month Redbook was down 1.5% compared to december, on expectations of a 1.2% drop.

RANsquawk 2nd February US Morning Briefing - Stocks, Bonds, FX etc.

• Tom Hoenig for Treasury (Simon Johnson)
• Moral hazard prompts TCW and AllianceBernstein to buy bank sub debt (Bloomberg)
• The dollar-alternative trade continues: commodities rise as AUD drops on no OZ hike (Bloomberg)
• A scoop of double dip (Barrons)
• iTraxx Fin widest to iTraxx Europe since Lehman (Bloomberg)
• Philippine bond sale fails for second time this year (Bloomberg)

RANsquawk 2nd February US Morning Briefing - Stocks, Bonds, FX etc.

RANsquawk 2nd February US Morning Briefing - Stocks, Bonds, FX etc.

The Investment Team at Broyhill huddles up at 6.30AM every Monday Morning, to review market action, various measures of sentiment, and portfolio positioning, to name a few. For the two hours leading up to our Morning Macro Call, we scan dozens of charts, pour over piles of data and review all of the models critical to our investment strategy. Notes from our meetings are distributed internally and reviewed in aggregate at our Monthly Macro Meeting. We’ve noted a significant shift in the investment landscape over the course of the past few weeks, so we thought we’d share this morning’s Views from the Blue Ridge.